As the automotive industry comes under ever greater pressure to control costs and the expansion of the European Union (EU) opens up new, more economical manufacturing locations, a growing number of carmakers and components suppliers are moving east. Indeed, research by PricewaterhouseCoopers suggests that about US$6 billion worth of automotive production will be transferred to Central and Eastern Europe over the next five years. The Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia will attract the bulk of this investment.
But relocating to another region is neither easy nor is it necessarily right for all companies — and the smaller the firm, the fewer the management resources it can deploy in planning the move. The big carmakers and their largest Tier 1 suppliers have already spread across the globe and can call on past experience. A small manufacturer stepping outside its homeland for the first time is likely to find the prospect much more daunting — and the impact much worse, if something goes wrong.
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Part 1: A growing number of automotive manufacturers are migrating to Central and Eastern Europe. But are they doing the right thing?In this, our first paper on setting up production facilities in Central and Eastern Europe, we discuss the continental drift of the past few years. We also look at the factors any manufacturer should consider before it decides to follow in the tracks of those that have already headed east. |
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Part 2: How should an automotive manufacturer that has decided to move to Central and Eastern Europe go about choosing the right location for its needs?What if a company decides to go ahead and take the plunge? Where, precisely, should it go? Our second paper covers the issues involved in choosing the right location. The decision is a complex one, not least because understanding of the region is still quite limited, despite the 16 years that have elapsed since the end of Communism. Moreover, finding the right location for a manufacturer's needs is not just a matter of selecting the right country, it is also a matter of selecting the right place within the right country. |
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Part 3: How should an automotive manufacturer or supplier that has decided to relocate to Central and Eastern Europe set about closing an existing plant in another country?How should an automotive manufacturer or supplier that has decided to relocate to Central and Eastern Europe set about closing an existing plant in another country? In our previous paper we discussed the issues involved in choosing the right location, but many companies also have to cope with shutting an existing factory in one country while making the move to another. In this paper we consider the challenges associated with disposing of such a business while optimising the value of the assets and controlling the costs. |
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Part 4: How should an automotive manufacturer that has decided to move to Central and Eastern Europe manage the transition?How should an automotive manufacturer that has decided to move to Central and Eastern Europe manage the transition? As the attractions of Central and Eastern Europe increase, a growing number of carmakers and components suppliers are relocating to the region. In our previous paper we discussed the issues involved in closing an existing plant in preparation for the move. In this paper we shall cover the challenges associated with managing the transition to a new site in one of the 10 Central and Eastern European states that have recently joined the European Union (EU). |
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Part 5: What problems should an automotive manufacturer that has moved to Central and Eastern Europe expect after the first few months, and how should it resolve them?An increasing number of automotive manufacturers are migrating to Central and Eastern Europe but even with the best preparation and research, there are serious challenges that only emerge once the move has actually taken place. One of the most common issues is identified as fraud in the fifth and final part of the Eastern Influx series, by PricewaterhouseCoopers. In addition, sourcing suppliers can be challenging. Much of the supply base has already been captured by large Western carmakers and Tier 1 suppliers. There is some untapped capacity in Bulgaria but little remains in more established manufacturing locations like the Czech Republic or Poland. Similarly there are severe skilled labour shortages in some areas of Central and Eastern Europe. If a manufacturer wants to capitalise on the key reason for moving East, reduced labour costs, it must work to ensure it successfully manages and retains its new workforce. It must think like the new employees, anticipate what information they will require, address any fears and manage expectations. It is also vital to identify key employees and incentives for them to stay. |